1.20 {dollars} for one euro: The weak greenback is weighing on Europe | EUROtoday

One euro prices greater than 1.20 {dollars} once more. The final time the euro was this costly was in 2021. But this doesn’t present Europe’s energy, however America’s weak point. The greenback price has additionally fallen towards different currencies.

This just isn’t new, the downward pattern started in 2022. But it accelerated once more in 2025 and 2026, with the US foreign money dropping 4 cents in worth within the final two weeks alone. This is a pointy drop within the overseas trade market. The trigger is Donald Trump’s commerce and customs conflicts, the assaults towards the American central financial institution, the excessive degree of debt within the USA and, most not too long ago, the Greenland disaster and the verbal assaults towards the Europeans. In this fashion, the USA is dropping belief within the greenback because the world’s reserve foreign money. The first traders are lowering their greenback investments.

Trump shall be comfortable. He desires a weak greenback as a result of that may assist cut back the commerce deficit. The weak point of the greenback makes American merchandise cheaper, which additionally profit from tariffs towards overseas competitors. What the president is ignoring: A weaker greenback makes imports dearer and inflation within the nation rises. That might damage the Republicans’ probabilities within the fall basic elections.

But Europe can be struggling. Conversely, the continent’s export trade shall be put beneath further pressure. Their merchandise, that are already affected by tariffs, will develop into dearer on account of a powerful euro. This is an issue, particularly for Germany with its international exporting firms, and can additional decelerate financial development. The undeniable fact that inflation stays low because of a powerful euro is little comfort. The inventory markets nonetheless appear to be unmoved by this. But in some unspecified time in the future they are going to now not have the ability to ignore the issue.